OIL PARTY: $EOG RAISES PRODUCTION GUIDANCE AND DRILLING LOCATIONS, ASSUMES OIL TO JUMP 50% FROM CURRENT LEVELS

In spite of EOG’s 28% drop in revenues over last year and a persistent bleeding out of cash, due to deleterious losses, shares are rising in the after hours on news that the company lost less than had previously been expected. Moreover, and indelibly so, the company is INCREASING the number of ‘premium drilling locations’ by around 30%–because things are so peachy green now.

Reports Q2 (Jun) adj net loss of $0.38 per share, $0.10 better than the Capital IQ Consensus of ($0.48); revenues fell 28.1% year/year to $1.78 bln vs the $1.52 bln Capital IQ Consensus.

In the second quarter 2016, EOG increased its inventory of net premium drilling locations from 3,200 to 4,300.
Total premium net resource potential increased from 2.0 billion barrels of oil equivalent to 3.5 BnBoe.

U.S. crude oil volumes of 265,400 barrels of oil per day in the second quarter 2016 exceeded the midpoint of the company’s guidance by 2 percent.
Total natural gas production for the second quarter 2016 decreased 5 percent versus the same prior year period.

The company has offered some super bullish guidance, going forward. They’re upping the numbers of wells to be drilled, as well as production levels, assuming WTI prices of $60, or just 50% higher from current prices.

3Q & FY16 Production guidance

Q3: Total crude oil/condensate volumes between 268.4-280.8 MBbld; NGL volumes between 75-79 MBbld; Natural gas volumes between 1085-1139 MMcfd
FY16 Total crude oil/condensate volumes between 269.6-275.8 MBbld; NGL volumes between 76-80 MBbld; Natural gas volumes between 1,127-1174 MMcfd

2016 Capital Plan Update and 2020 Crude Oil Production Outlook:
As a result of cost reductions and efficiency improvements, EOG has increased its targeted number of well completions for 2016 from 270 to 350 net wells. Many of the additional well completions are scheduled for late 2016.

In addition, due to increased drilling productivity, the company expects to drill 250 net wells, 50 more than in its original 2016 plans. This increase in activity will be accomplished while maintaining 2016 capital expenditure guidance of $2.4 to $2.6 billion, excluding acquisitions. EOG can achieve significant production growth with balanced cash flow from 2017 through 2020, even in a moderate commodity price environment.

Based on EOG’s long-term plan and assuming a flat $50 West Texas Intermediate crude oil price (WTI), EOG would expect 10 percent compound annual crude oil production growth through 2020.

Assuming flat $60 WTI, EOG would expect 20 percent compound annual crude oil production growth through 2020.

Party like it’s 2007. EOG is rising in the after hours.